SEC taps group to validate corporate governance forms

The Securities and Exchange Commission (SEC) will tap the Institute of Corporate Directors to validate the corporate governance self-rating forms submitted by listed companies and issuers of registered securities.

Justina Callangan, head of the SEC’s Corporation Finance Department, said the review would zero in on the attendance of corporate directors. "We would like to find out who are those who have poor attendance in meetings," she said.

Under the corporate governance rules, the absence of a director of a listed company for more than half of all meetings called by the board is a ground for temporary disqualification. The disqualification will apply for purposes of the succeeding election.

Other grounds include the refusal of a director to fully disclose his/her business interests as required under the Securities Regulation Code and the dismissal from directorship in another listed company for cause.

Corporate secretaries are required to file after the end of the fiscal year a certification as to the attendance of directors at board meetings.

Tougher responsibilities have been given to corporate secretaries of listed firms to make sure that board procedures are being followed and that rules and regulations are being complied with.

The self-rating forms will aid the SEC in assessing the companies‚ level of compliance with the leading practices and principles on good corporate governance.

Companies will rank their compliance with the commitments they made in their corporate governance manuals. The rating shall be from zero to five with the latter being the highest.

The SEC said the mere submission by listed corporations of their respective corporate governance manuals does not necessarily mean they already adhere to sound business principles.

Corporate governance manuals are aimed at increasing transparency and accountability in company operations and strengthening minority shareholder rights.

The Code is intended to provide guidance to corporate directors so that they can carry out their duties and responsibilities effectively and in accordance with the highest professional standards.

Under the SEC’s model manual, listed firms were required to install a process of selection of competent directors. An annual assessment should be made on the performance of the board’s effectiveness as a whole and that of the individual directors including the chief executive officer.